Editorial: Building state's reserve fund a worthy goal

One of the major debates sure to split along partisan lines in the Legislature early next year is what to do with an estimated $467 million in reserves the state treasury is forecasting headed into the 2013-15 state budget.

At this point, it's hard to know which way the Legislature should go because of what's going on in Washington. The "fiscal cliff" of federal tax increases and budget cuts scheduled to kick in Jan. 1 if Congress doesn't act has everyone waiting and wondering. If those cuts occur, Wisconsin and every other state can expect less federal aid next year. That would mean the $467 million reserve and probably more would be needed just to maintain the status quo, never mind giving employees raises or adding new spending.

But if Congress again kicks the can down the road, then the immediate crisis is prevented and states will have more short-term certainty.

The Legislature and Republican Gov. Scott Walker have two considerations as they start to craft the biennial budget early next year.

First, most state workers haven't had a pay raise in four years, during which they also had to start paying 5.9 percent of their pay toward their pensions and also saw their health insurance premiums go up.

Second, Wisconsin has not socked away enough money during good times to help weather recessions. According to the nonpartisan Wisconsin Taxpayers Alliance, when the 2007-08 recession started, Wisconsin was the state with the second-smallest budget reserve relative to spending (1 percent), better only than Arkansas, which had no reserve at all. That compares with Iowa's 15 percent reserve and Minnesota's almost 6 percent. The $467 million reserve estimate amounts to 3 percent of the $14.36 billion the state has budgeted to spend this year, according to the Milwaukee Journal Sentinel.

Another consideration is Walker's desire to further cut local property taxes and provide some relief in income taxes as well.

Although Republicans also hold majorities in both houses of the Legislature and need not compromise, they should. One message from the Nov. 6 election is that gerrymandering works when done right. The other message is that voters want their lawmakers to work together for the betterment of all, not just for special interests and narrow agendas.

Yes, we need to build up our reserves, and Walker's budget discipline has helped move the needle in the right direction. But the real lesson from the last 10 years is that the time to build a healthy reserve is when the economy is strong, which Wisconsin lawmakers of both parties failed to do.

That requires discipline as well, because there's never a shortage of individuals and groups clamoring for the state's money.

Building a reserve is crucial to help ensure we can continue to provide health care and education, especially for the poor, when tax collections go down and jobless rates go up.

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Editorial: Building state's reserve fund a worthy goal

One of the major debates sure to split along partisan lines in the Legislature early next year is what to do with an estimated $467 million in reserves the state treasury is forecasting headed into

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